Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended March 2, 2009

03-Mar-09
CRUDE OIL Oil prices ended the week on a lower note in Asia, after rallying by almost 30% in the week of March 2, 2009, on signs of improving US crude demand. Crude for April dipped to settle at US$44.6 a barrel in Singapore on the Nymex. Market indicators imply that a drop in US crude demand may be stabilizing, as Government data indicated a 1.7% jump in gasoline demand from the same period last year. A report by the US Energy Department showed a 700,000 barrel rise in crude inventories for the week ended February 20, less than the 3.5 mln barrel build-up analysts expected. How long the rally in oil prices will continue remains uncertain as gloomy economic news continue to reflect USA’s worst recession in decades. A new Government report indicates that new jobless claims rose again with over 5.2 mln Americans continuing to receive unemployment benefits. NAPHTHA Naphtha prices in Asia rose in line with the 30% increase in oil prices in the week of March 2, 2009. Spiking by over 35 dollars, open-spec prices for H1-April delivery ended the week at US$435/MT CNF Japan. ETHYLENE As downstream demand weakened, particularly from China, FOB Korea ethylene prices in Asia dropped by about 8% to US$595/MT in the week of March 2, 2009. Loaded with ample stockpiles for the month, most end users have kept away from the markets, leading to listless demand. As FOB Korea buying interest declined by an additional fifty dollars to US$540/MT, and even as sellers dropped their offers by similar amounts to US$650/MT CFR FE, deal conclusion for March delivery was heard at US$635/MT CFR Taiwan. PROPYLENE Triggered by falling demand and prices for derivative polypropylene, FOB Korea propylene prices in Asia have dipped to U$645/MT in the week of March 2, 2009. Buying intentions of US$690/MT CFR China were countered with sellers offers about 25 dollars higher. STYRENE MONOMER CFR China Styrene Monomer prices in Asia have moved up to US$775/MT in line with rising feedstock benzene and oil values in the week of March 2, 2009. Deals for next month shipment were concluded at these levels, triggering an increase in buying intentions. Feedstock benzene FOB Korea prices have risen by about ten dollars to cross US$400/MT for next month. April shipment prices have increased in tandem with rising crude and naphtha values. VCM VCM prices were seen going downhill in Asia to US$585/MT in the week of March 2, 2009, in line with sluggish demand and falling prices of downstream PVC. Despite successful conclusion of CFR China deals for this month at US$600/MT, buying intentions withdrew by about fifty dollars as downstream demand tumbled. It seems to be a battle between buyers with sluggish buying intentions and sellers who are reluctant to lower offers below the US$600 mark. EDC Supply constraints have caused EDC prices in Asia to steady at US$210/MT in the week of March 2, 2009, despite deteriorating markets for derivatives VCM as well as PVC. Supply has been restricted due to reduced run rates across global capacities since last month, resulting in limited arrivals of deep sea cargoes in Asia. CFR Asia seller’s offers of US$260/MT continue to be met with damp buying interest about 60 dollars lower. POLYMERS HDPE As demand from China drops in line with domestic offers, HDPE prices in Asia continue to fall to US$945/MT CFR China in the week of March 2, 2009. Traders had stockpiled in a bid to gain from post Lunar New Year demand recovery from processors who had depleted inventories. In the absence of demand revival, they have been compelled into selling, down-revising prices. Another factor compounding the situation is the advent of deep sea cargoes priced lower by almost 70 dollars. LDPE Restricted avails in the region have steadied LDPE prices in Asia at US$975/MT in the week of March 2, 2009. Supply constraints can be attributed to delays in Middle Eastern plant start ups that has prevented a flood of cheaper cargoes into the continent. A deadlock has crept into the market as both Chinese buyers and sellers who seem unwilling to move from their bids of 1000/MT and offers about 20 dollars higher. The outcome will depend on who will relent first. The Asian markets seem to be in a scenario of marginal speculative demand, very limited end-user demand amid high selling interest. LLDPE A hold up in the arrival of lower priced cargoes from the Middle East due to delays in plant start ups there has had a steadying effect on LLDPE prices in Asia. Prices have steadied at US$985/MT in the week of March 2, 2009, even as March shipment CFR China offers were heard about 20-30 dollars higher. Deal for cargoes from the Middle East offered at US$990/MT CFR China was finally concluded almost 20 dollars lower. POLYPROPYLENE Polypropylene prices in Asia have plunged with waning demand from China to US$865/MT in the week of March 2, 2009. CFR China offers for injection grade for cargoes from South Korea dipped to US$890/MT, while those from Thailand were almost 20 dollars lower. Few deals were heard concluded at US$850/MT. PP prices are unlikely to rise in the next few weeks as sellers seem to be in a scurry to liquidate cargoes at lower prices as demand from China turns bearish and deep-sea cargoes for April delivery are being offered at lesser. POLY VINYL CHLORIDE Increased supplies by domestic carbide based PVC makers has helped in curtailing imports. As prices as well as demand in China plunges, PVC prices have dropped by about 20 dollars to US$675/MT in Asia in the week of March 2, 2009. March shipment CFR China PVC from Taiwan and South Korea has been sold for US$700/MT. Reluctance on part of the Chinese buyers to accept sellers offers has triggered a diversion of additional cargoes to India and Middle Eastern region. GPPS GPPS prices have fallen to US$835/MT CFR China in the week of March 2, 2009 in Asia. Seller’s offers at US$840-850/MT CFR China have been met with buying bids about 15-20 dollars lower. Buyers have not expressed bids above US$820/MT CFR China, with few bids weakening to US$800/MT. ABS Ample stockpiling by buyers post-Lunar New Year holidays has weakened demand in China, bringing down prices to US$1100/MT in Asia in the week of March 2, 2009. Deals are being concluded at the US$1100/MT mark for offers from South Korea and Taiwan quoted about 20-45 dollars higher. Despite a lull in market movement, offers continue to be on an uptrend.
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